why is employee turnover so high right now?

Globally, companies are struggling with increased employee turnover due to changing mindsets among employees and evolving work practises. The pandemic may have sparked the tight labour market in Europe, but the underlying tinder that fuelled the Great Resignation has existed for some time.

According to Gallup's State of the Global Workplace: 2022 Report, job dissatisfaction in Europe is higher than in other regions, with only 14% of employees reporting workplace engagement. Without distinct ties to their organisation, the remaining 86% are at risk of leaving should another opportunity arise or job grievances occur.

changing expectations among workers

Randstad's latest Workmonitor Report surveyed over 35,000 workers in 34 global markets to gather their thoughts on work, life and the balance between them. Here in New Zealand:

42% of Gen Zs and 40% of younger Millennials say they have previously quit a job because it didn't fit with their personal life
over a third of all employees say they would rather be unemployed than unhappy in a job
51% of younger Millennials and almost half of Gen Z (48%), wouldn't accept a job with a business that doesn't align with their values on social and environmental issues. This sentiment is shared among Gen X (33%) and Baby Boomers (37).

If your workers aren't feeling a connection to your company, whether through a social cause or fulfilling work, you could be experiencing higher-than-expected employee turnover.

emerging technologies create worker stress

As companies move toward digital and automated processes, employees must continually master new software and technologies and not always to their benefit. For example, a recent poll of workers in Continental Europe found that 36% felt their company's recent technology investments didn't improve their work experience.

It's critical that employers consult workers, especially when it comes to software platforms that directly impact their daily work. Constant communication can help diagnose pain points and ensure your team is on board with adopting technology. In addition, choose an appropriate training format that provides feedback and incentives.

how much does it cost to replace an employee?

To remain productive and solvent, you can't afford to lose employees involuntarily. Data from the Work Institute estimates that each lost employee costs the company, on average, one-third of their annual salary.

Gallup puts the figure even higher, placing the value of a satisfactory replacement employee as equal to one-half to two times the original employee's salary. As a result, if your business is struggling with employee retention, it can significantly affect your bottom line and damage your company's brand in the process.

To accurately estimate how much it costs to replace an employee in your organisation, you must consider direct and indirect costs (and even some intangibles).

the direct cost of hiring an employee

The most obvious factor in calculating turnover expense is the cost associated with new talent acquisition. Depending on your recruitment process and the employee tier level, you may have any or all of the following outlays:

ad placements
recruiting agencies
temporary and contingent workers management
HR and manager salary allotment to screen and interview prospects
travel and moving expenses
signing bonuses
cost of onboarding a new employee, including training, equipment allocation and technical set up

Looking at the above expenditures, you can see a decided advantage to hiring internally. You most likely have an internal job posting site and can eliminate much of the background screening and new-hire onboarding. In addition, you already have a record of the employee's job performance and probably a good idea of their skills and assets.

Regardless of whether you hire internally or externally, you can't afford to let good talent drift out your doors. Especially when there are ways to address the problem. In addition, direct costs represent only a portion of employee turnover costs.

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